The real regulation we need is for government to stop bailing out failed companies.

RB TexLa

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Thu Sep-18-08 12:16 AM
Original message

The real regulation we need is for government to stop bailing out failed companies.

This provides protection for failure. Let companies know if they do well they get to buy up what they want from failed companies, don't and they begin to take the same risks. If you know there is a net you will try to jump further than you can jump, if there is no net only idiots will try to jump further than they can.

If the thought of government bailouts were removed these companies would have been much more weary of the over speculation and risk they took. They can and should have freedom to speculate but they also have to have the freedom to fail.

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Birthmark

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Thu Sep-18-08 12:31 AM
Response to Original message

1. Yeah. What you said. :)

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dkf

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Thu Sep-18-08 12:40 AM
Response to Original message

2. The problem is one default crushes the next companies balance sheet and so on and so on.

The more cos that fail, the less likely we can get out of the housing crisis.

The problem is we let them get too big and risky. Now they can take down the whole financial system if we aren't careful.

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pnwmom

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Thu Sep-18-08 02:02 AM
Response to Original message

3. It's a little too late for that. n/t

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magellan

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Thu Sep-18-08 02:04 AM
Response to Original message

4. They need to be busted up before they get "too big to fail". n/t

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Marsala

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Thu Sep-18-08 05:44 AM
Response to Original message

5. I think there won't be many more bailouts...

Bear-Sterns was special because they went first, and they only got a loan to assist a merger. AIG was too big to fail and would have taken the entire global economy with it, immediately. That doesn't apply to other, smaller investment banks.

Anyway, it's not a matter of taking risks anymore, it's a matter of who will collapse and who will manage to survive.

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WeDidIt

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Thu Sep-18-08 05:48 AM
Response to Original message

6. I think the bailouts are about done, we've blown our wad

We've bailed out to the tune of $900 Billion. The Fed could only raise $40 billion so far for the AIG bailout and still needs $45 billion more.

The well's run dry.

BTW, that also means no more deficit spending because nobody is going to finance us. The world is nearly tapped out.

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